Income Tax Complexity
22 June 2002
It is ridiculous that the Congress has made the paying of income tax so complicated that the average tax payer has to hire someone to complete the vortex of required forms. It is absurd that when you call the IRS help line, most of the time, they give incorrect answers. Clearly taxes have gotten too complicated and something must be done to correct this situation.
Why have taxes gotten so complicated? Special interests. Every time Congress singles out a specific group for a special tax break it further complicates our taxes.
The solution is to get rid of all deductions, credits and offsets and just pay a certain percentage of income. This percentage could be taken directly out of a paycheck and no forms would be required, no 1040 needed. Of course that would mean no deductions for home mortgage interest or other popular adjustments which is why Congress does not have the courage to fix this problem. They are afraid that if they get rid of all these special interest deductions that they will not be well funded in the next election. I say if they don't fix this problem we should not vote for them in the next election.
The only fair system is a graduated flat tax, that is, everyone making less than the poverty level plus 10% to 15% pays no taxes, and everyone making more than that would pay a particular percentage which increases with salary. It is only fair that those making more money pay a higher percentage, not only can they afford it; it is also a way for the most fortunate in our society to help the less fortunate.
For most people the only reason we need to do our taxes each year is to get back what we should not have paid in the first place. If the tax was removed fairly in the first place, no return would be necessary.
This same logic could be applied to things like capital gains, if you sell a stock you pay a set percentage of the profit to the government at the time of sale, no forms required. You show a loss, then you pay nothing and you get no deduction at the end of the year. It is not the government's responsibility to cover your losses.
The real reason this simple plan will never be instituted is that it would do away with all the corporate loop holes that have created the amazingly complicated six foot stack of confusion called the tax code. The corporate tax lawyers are employed to insure that corporations not pay their fair share of taxes. They are always trying to get around the paying of taxes, to the country that allowed them to do so well. It is just wrong that a company with billions of dollars in sales not pay a penny in tax. They don't realize that if we got rid of the loop holes and everyone paid their fair share of taxes the rate would go down. They would also save money by not having to hire an army of lawyers and accountants to Weddle their way out of paying tax. There would be no way around, the corporation reports a profit of X and the government takes Y percent. I would guess this percentage would be no greater than 20%. Although the outcry of how this would put companies out of business is completely predictable, however it is a system that has allowed the average citizen to survive since 1913. It is fair that every company pay its share of taxes, just as it is fair that every able citizen pay their share.
It should also be declared unconstitutional to let government agencies give special breaks to companies that bully their way out of State, Local and Federal taxes with the promise of moving. Companies have learned that they can leverage one town or state against another and greatly reduce paying their fair share of taxes. Every time a company gets their taxes reduced the burden of paying their taxes is shifted onto the local citizens. The only way to stop this corporate blackmail is to outlaw it nationally. States can not do this by themselves; it must be done on a national level.